trading app

The last order you need to understand as an online novice is that of a take profit order. This works in the same way as the stop-loss order discussed earlier, but in reverse order.

For example, while you have already placed your stop loss order to cut your losses to 10%, you may want to exit your trade if Tesco shares rise by 20%. With an entry price of 235.60p, a 20% take profit order would need to be placed at 282.72p. When the price is reached, your trade will automatically close.

Trading fees

One of the most important metrics to look out for when choosing an online trading site is the level of your fees. Pricing models can vary widely in the online trading sector. So be sure to read the following sections on spreads and trading commissions.

The spread

In the vast majority of cases, your chosen online broker will charge a spread. This is essentially the difference between the buy and sell price of an asset. The spread immediately puts you at a disadvantage when trading, as you have to make up the difference to break even. The lower the spread, the more favourable it is to you as a trader.

Trying to get a handle on the spread can be confusing at first. So look at the following example.

  •     You want to trade oil
  •     If you want to go long, the purchase price is 24.00 USD
  •     If you want to go short, the selling price is 23.60 USD
  •     The difference between the two prices is 1.69%.
  •     This means that you need to earn at least 1.69% on your trade to break even

For example, let's say you have placed a buy order for oil at 24.00 USD. If you then want to exit your position, you can only do so at 23.60 USD - as this is the current selling price.

Only if the selling price increases by 1.69% to 24.00 USD would you break even, as this is the price at which you entered the market.

forex currency

Trading commissions

Trading commissions are charged by brokers when you buy . sell an asset. This is usually calculated as a percentage, which is then multiplied by the size of your trade.

Here is exmple from trade-exness: "ตัวอย่างเช่นสมมติว่าคุณซื้อหุ้น British American Tobacco มูลค่า 4,000 ปอนด์ในแอปซื้อขาย Exness ค่า swap. หากนายหน้าเรียกเก็บค่าคอมมิชชั่น 1% คุณจะจ่าย 40 ปอนด์. ในกรณีอื่นนายหน้าอาจเรียกเก็บค่าธรรมเนียมคงที่. ตัวอย่างเช่นคุณอาจต้องจ่าย 10 ปอนด์สําหรับการซื้อและขายแต่ละครั้ง - ไม่ว่าคุณจะซื้อขายเท่าไหร่."

"For example, let's say you buy £4,000 worth of British American Tobacco shares. If the broker charges a commission of 1%, you pay £40. In other cases, the broker may charge a flat fee. For example, you may have to pay £10 for each buy and sell order - regardless of how much you trade."

The good news is that a number of brokers who are in the online investment business allow you to trade commission-free. This means that you only have to cover the spread.

With the majority of online trading platforms, you can buy and sell assets with leverage. This way you can increase the size of your trade. Let's say you apply leverage of 500x on a £5 order. In doing so, the value of your trade is £2,500 - even though you only have £500 in your brokerage account.

On the one hand, applying leverage can increase your profits when the markets are moving in your favour. They are also useful if you want to trade but don't have a very high account balance. However, trading with leverage is also very risky as you could lose your entire stake.